Principles of Marketing

“ Product, Services, and Branding Strategy”

The meaning of product1. A product is the key element of a market offer. This offer becomes

the basis upon which a company build profitable customer relationships.

2. In a narrow sense a product is a set of attributes assembled in an identifiable form. In marketing’s definition however customers are not buying a set of attributes but rather benefits that satisfy their needs.

3. A PRODUCT is anything that can be offered to a market for attention, acquisition, use or consumption that might satisfy a need or a want.

4. A product may be tangible or intangible in nature and may include physical objects, services, events, persons, places, organizations, ideas or mixes of these entities.

5. A service is a product which is any activity or benefit that one party can offer to another that is essentially intangible and does not result in the ownership of anything.

6. Irrespective of whether a product is purely tangible or pure service , in order to differentiate their offers companies are staging, marketing and delivering memorable customer experiences.

To move a step ahead in building profitable relationships,

customer-centered companies try and market superior

experience because they understand that the customers are not just buying marketing offers , they are buying what those offers will do for them

Levels of Products and Services Product planners need to think if products and service on three levels

because each level defines what can be done for the customer and henceforth it adds more value.

3.Augmented product

2. Actual product

1. Core Benefit

Created by offering additional consumer services and benefits – like Flyer miles in airlines or after sales service for cars

Created by developing product/service features, design, quality level, a brand name and packaging

This answers the question i.e. What is the customer really buying, for e.g.. A man buying a Lexus is not just looking for a car, he is looking for prestige

Classification of products and services These may be classified broadly into Consumer

products and Industrial products.

Consumer products are those which are bought by final consumers for personal consumption, based on how consumers purchase them, they are classified further into categories as:

- Convenience goods- Shopping goods- Specialty goods- Unsought goods

Marketing Considerations

Convenience Shopping Specialty Unsought

Customer Buying Behavior

Frequent purchase with little planning and low customer involvement

Less frequent purchase with more planning and effort and more comparison

Strong brand preference and loyalty and little brand comparison

Little product awareness or knowledge

Price Low price Higher Price High Price Varies

Distribution Widespread distribution

Selective Distribution

Exclusive Distribution

Varies

Promotion Mass promotion Advertising and personal Selling

More carefully targeted promotion

Aggressive advertising and personal selling

Examples Salt, toothpaste, detergent

Mobiles, kitchen appliances

Afghani carpets, Rolex watches

Life Insurance, blood donations

Industrial Products These are products that are purchased by

individuals and organizations for further processing or for use in conducting a business. Thus the distinction between consumer and industrial product is based on ‘the purpose of purchase’

The three groups of industrial products are as under- Materials and parts (Raw materials, Manufactured materials and items)- Capital items (Installation and Accessory equipment)- Supplies and Services (Operating supplies, Repair and maintenance,)

Price and service are major factors as far as Materials and parts are concerned, branding and advertising tend to be less important.

Capital items are industrial products that aid the buyer’s production process or operations.

Supplies are the convenience products of the industrial field because they are usually purchased with minimum effort or comparison

Marketing Offering - Organization

Organization marketing consists of activities undertaken to create , maintain or change the attitudes and behavior of target customers towards an organizations. Corporate image Advertising is carried out – e.g. Shell which propagates the message that they excavate looking for fuel resources and they also contribute to conserving and protecting the environment.

Marketing Offering - Persons

Person marketing consists of activities undertaken to create , maintain or change the attitudes towards particular people e.g. Donald Trump, Oprah.

Creating or associating with well known personalities often helps organizations achieve their goals better e.g. Michele Jordan, Tiger Woods

Marketing Offering - Place

Place marketing consists of activities undertaken to create , maintain or change the attitudes towards particular places e.g. Tourism programs or projects or slogans attached to cities as in ‘Karachi – city of lights’

Marketing Offering – Ideas

Ideas can be marketed , specially through societal marketing which is the design , implementation and control of programs seeking to increase the acceptability of a social idea, cause ort practice amongst a target groups. E.g. Total’s ‘Drive safe’ campaign, Shield’s ‘Change your toothbrush’ campaign.

Product and Service Decisions

Decisions are made at three levels by marketers.

1. Individuals Product and Service Decisions

2. Product Line Decisions

3. Product Mix Decisions.

Individuals Product and Service Decisions This is a five step process which goes as

follows:-

Product Attributes

Branding

Packaging

Labeling

ProductSupportServices

Product Quality – focus here is on how much value and satisfaction the customer gets after using product, henceforth product quality is as the ability of a product to perform its functions (durability, reliability, precision, ease of operation and repair)

Quality has two dimensions level and consistency – its level should support the position of the product in the target market and there should be conformance quality – freedom from defects and consistency in delivering a targeted level of performance.

Product Attributes

Product Features – These define how the customer would like his/her product, features are competitive tool for differentiating the company's product from competitors products.

Product Style & Design – Style describes the appearance of a product and Design is shaping a customer product and service experience. E.g. a car with leather seats ( style) but bad engine (design)

Product Attributes

Which of these soap bars would you buy

and why?

Branding

Soap PEARS

A brand is a name, term, sign, symbol or design, or a combination of these that identifies the maker or seller of a product or service.

A brand is a name and or mark intended to identify the product of one seller or group of sellers and to differentiate the product from competing products.

Branding

Brand names help consumers identify products that might benefit them, they tell the buyer something about the product quality.

Branding helps to protect the products unique features( through trade mark), and it helps to segment markets.

Branding

The activities of designing and producing the container or wrapper for a product.

There can be a primary package (tube of toothpaste)

There can be a secondary package (box in which tube is kept)

There can be a shipping package (corrugated box carrying dozens of toothpastes)

Packaging

Packaging helps to do the following1. Protects the product on its way to the consumer2. Protects the product after it has been purchased3. Helps gain acceptance of the product from the

middlemen.4. Helps persuade consumers to buy the product

Innovative packaging can give a company an advantage over competitors, the supermarket is a highly

competitive environment where packaging is the last chance to influence buyers.

Packaging

A label is the part of the product that carries information about the product and the seller.

There are three type of labels:1. A brand label is simply the brand alone

applied to the product or package.2. A descriptive label gives information about

the products use.3. A grade label identifies the products judged

quality

Labeling

A label helps to :

a) Identify the product

b) Describe the product

c) Promote the product Labeling is affected by the following:-

1. Unit pricing

2. Open dating

3. Nutritional label

Labeling

1. Survey customers periodically to assess the value of current services and obtain ideas for a new ones.

2. Assess the cost of providing these services.

A good e.g. of support service would be ‘Rabta’ ‘which is associated with Dalda, in addition

to this customer complaint centers that different brands have.

ProductSupportServices

Product Line Decisions A product line is a group of

products that are closely related because:-

a) They function in a similar manner

b) Are sold to the same customer groups

c) Are marketed through the same type of outlets

d) Or fall within given price ranges.

Product Line Decisions Product line length are the number

of items in the product line. This length in influenced by the company objectives and resources.

Product line length can be increased in two ways

1) Line stretching

2) Line filling

Product Line Decisions1) Product Line Stretching – this takes place when

a company lengthens its product line beyond its current range, it may be upward , downward or both ways e.g. Toyota making Lexus, Mercedes making its C-class cars and Marriott Hotels having its expensive line of hotels and its low priced inns.

2) Product Line Filling – Adding more items within the current product range , this is done particularly to reach for extra profits, satisfying dealers, using excess capacity, being the leading full line company and plugging holes to keep out competitors. e.g. LUX bringing out its many variations.

Product Mix Decisions A product mix or product assortment

consist of all the product lines and items that a particular seller offers for sale.

Fabri-carePersonal

care Hard surface

care

detergents softener starchHaircare

Skincare

fragrance Machine dishwashing

Product Mix Decisions The four different dimensions are as follows:-

1. Product mix width refers to the number of different product lines the company carries.

2. Product line length refers to the number of products within the lines.

3. Product line depth is the number of variations /versions of products.

4. Product line consistency refers to how closely related the various product lines are in end use, production requirements, distribution channels

Product Mix Decisions The company can increase its business in four

ways:-

1. It can add new product lines widening the product mix.

2. It can lengthen its existing product lines by adding more products to become a more full line company.

3. It can add more versions of each product and thus deepen its product mix

4. Finally the company can use more or less line consistency depending on the kind of reputation it wants to have in the field.

Building Strong Brands What's in a brand? – it represents

consumer perceptions and feelings. Brands exist in the minds of consumers.

Strong brands survive the tests of time and become larger than life icons through the generations, they become part of the culture.

A powerful brand has brand equity – this is the value a brand adds to a product, it is the positive differential effect knowing the brand name has on customer response.

The advantages of brand equity: A powerful brand enjoys a high-level of

customer loyalty and awareness Consumers expect stores to carry the brand,

henceforth the company has more leverage in bargaining with resellers

Since brand name carries high credibility, the company can easily launch line and brand extensions.

Because it is expensive and time consuming to build brand equity , it create a barrier for competitors

Brand equity can help a product survive through cultural shifts and changes in consumer tastes.

How to Build Strong BrandsBrand

Positioning

Brand name selection

Brand Sponsorship

Brand Development

Brand Positioning Marketers need to position their products

clearly in the minds of the consumers , they can do so by positioning brands at these levels

a) Product attributes – here the marketer talks about the products innovative attributes, but customers are not interested in attributes as such, they are interested in what these attributes will do for them.

b) Positioning by Benefits – The marketers here go beyond the ingredients of a product and talk about the resulting benefits from use.

c) Positioning by strong beliefs and values – you cannot just talk about attributes and benefits, in fact you need to touch the customers at a much deeper level.

Brand Positioning When positioning a brand a marketer

should establish a mission for the brand and vision of what the brand must be and do.

A brand is the company’s promise to deliver a specific set of features, benefits and service consistently to buyers.

A brand is a contract to the customer regarding how the product or service will deliver value and satisfaction. The contract must be honest and simple.

Brand name selection Brand-name is an important part of a

products success, it should have the following attributes:

1. Suggest something about product

2. Easy to pronounce, remember, recognize

3. Distinctive

4. Easily extendable

5. Easily translatable in other languages

6. Capable of registration and legal protection.

Brand Sponsorship

There are four options at how a product should be launched:

1. Manufacturer’s Brand (national brand)

2. Private Brand (store brand)

3. Licensing

4. Co-Branding

Manufacturer’s Brand Vs Private Brand

Retailers have many advantages, they control what goes on the shelf, where it goes and what price they will charge for it .

Private brands are hard to establish and costly to stock and promote, however they give resellers exclusive products that cannot be bought from competitors resulting in greater store traffic and loyalty

Licensing

Under a licensing agreement , the owner of a trademark grants permission (a license) to other firms to use its brand name and brand mark their products. A licensee which is the company that receives the license ordinarily pays a royalty of the wholesale price of each item bearing the licensed trademark. The royalty percentage depends upon the amount of equity connected with the brand offered by a licensor, which is the company that owns it.

Co-Branding The practice of using established brand

names of two different companies on the same product.

Advantages of co-branding are as under

1. Combined brands create greater appeal and equity

2. It allows a company to expand its existing brand into un-chartered territory

Brand Development

Line Extension Brand

ExtensionBrand

Extension

Multi-brandsMulti-brands NewBrandsNew

Brands

Brand Name

Existing

New

Product Category

Existing New

Line Extension

This occurs when a company introduces additional items in a given product category under the same brand name.

Line extensions are low cost, low risk ways to introduce new products to meet desire for variety, use of excess capacity or simply to get more shelf space, over extended lines may cause the brand to loose its positioning

A line extension works best when it takes sales away from competing brands, not when it cannibalizes the company’s other items.

Brand Extension

This involves the use of successful brand name to launch new or modified product.

Brand extension gives the product instant recognition and acceptance, but an extension should not be too far away from the current line of business otherwise confusion regarding brand image may occur ( brand association is very important)

Multi-brands

When companies introduce additional brands in the same category

Multi-branding offers a way to establish different features and appeals to different buying motives.

A drawback could be that each brand may contain only a small market share and the company may end up spreading its resources over many brands instead of the profitable ones.

New Brands

A company might believe that the power of its existing brand name is waning and a new brand name is needed, a company also creates a new brand name when it enters into a new product category.

Managing Brands

1. The brand's positioning must be continually communicated to the end users – this happens through advertising which is merely a touch point but it is not as great as ‘personal experience’

2. Everyone in the company must live the brand credo

Services Marketing

Services are1. Intangible – they cannot be seen, tasted,

felt, heard or smelled2. Inseparability – They cannot be separated

from their providers3. Variability – Quality depends on who

provides them and when , where and how4. Perishability – they cannot be stored for

later use or sale

Services Marketing

The service profit chain

1. Internal service quality

2. Satisfied productive service employees

3. Greater service value

4. Satisfied and loyal customers

5. Healthy service profits

Services Marketing Tasks

1. Managing Service Differentiation – through delivery and imaging

2. Managing Service Quality

a) Through good service recovery

b) Empowering front line employees

1. Managing Service Productivity – through training current employees

Principles of Marketing

“ Product Life-Cycle Strategies”

Product Life Cycle (PLC)

The course of a product’s sales and profits over its lifetime.

It involves five stages:

1. Product Development

2. Introduction

3. Growth

4. Maturity

5. Decline

Product Life Cycle (PLC)

The concept is applicable to :a) A product class ( laundry soaps) – here the

PLC is the longest and stay for long in the mature phase.

b) A product form (powdered detergents) – They have the standard PLC shape.

c) Brands (Ariel) – Here the LC can change quickly due to the market environment and competitors.

Product Life Cycle (PLC) The concept is applicable to :a) Styles – ‘ A basic and distinctive mode of

expression’ ; i.e. in homes, art and décor. A style may last for generations.

b) Fashion – ‘ a currently accepted or popular style in a given field’ ; fashions tend to grow slowly , remain popular for a while and then die. E.g. the 80s and the 90s fashion.

c) Fad – ‘a temporary period of unusually high sales driven by consumer enthusiasm and immediate brand or product popularity’ E.g. the band ‘Noorie’ (enjoy it while it lasts), Pokemon.

Product Development

The company develops a new product

Sales are zero Investment costs keep

increasing

Introduction The product is first distributed and made

available for purchase. Profits are negative due to low sales and high

distribution costs There is no product refinement here, the most

basic product version is to be sold henceforth firms focus their selling on buyers who are most ready to buy.

It is advisable not too start off with too large an agenda in the beginning because it may not be easy to maintain in the future.

Growth Here the product starts to climb quickly. Sales start to ‘grow’ Early adopters ( buyers guided by respect

and are opinion leaders in their circle) will continue to buy and the late majority will follow suit.

New opportunities attract more competitors, bringing innovation and henceforth expanding the market.

The focus is now on build more and sell more to meet competition.

Growth Profits go up as cost is now spread over a larger

volume and per unit cost falls. Prices remain where they are or slightly fall when

needed. BUILDING A BETTER PRODUCT ( quality, features,

models) Building product conviction and purchase Educating the customer Entering new markets or segments Drawing a line on how much will be spent on

innovation and refining the product is necessary to have adequate funds available to sustain the product in the maturity phase.

Maturity Sales growth slows down or levels off This stage lasts longer than the other stages

and is a tough area foe the marketers. After the growth stage, the firm maybe

dealing with overcapacity, when they push to sell off their products now they are met with greater competition.

Once again to deal with a market that may be bored of the product , the firm needs modify the market, product or marketing mix.

Maturity Modify the market: the company may look for

new users or market segments ( Life Buoy tapped the upper market segment), reposition the brand (like HBL did) or increase usage amongst users ( Energile with their instant drink)

Modify the product – Change the product characteristics such as quality, features to inspire more usage e.g. National Sqeezy, Fair and Lovely

Modify the marketing mix – changing one or more marketing mix elements. E.g. Pakistan Post

Decline Sales decline in this stage sometimes slowly or and

sometime rapidly. They decline because of technological advances, shifts in

consumer tastes and increased competition. A weak product may be sucking the life out of healthier

products because a weak product becomes a high maintenance problem.

The firm may decide to maintain its weak product if the competition leaves the industry

The firm may decide to harvest the product by cutting on the various costs associated with it hoping that profits will increase

Last of all the firm may decide to drop the product from the line or sell it off to another at salvage value.

Characteristics Introduction Growth Maturity Decline

Sales Low sales Rapidly rising Peak Declining

Costs High Average Low Low

Profits Negative Rising High Declining

Customers Innovators Early adopters Middle Majority Laggards

Competitors Few Growing Number Stable number declining

Declining

Marketing

Objectives

Create Product awareness

Maximize market share

Maximize profit while defending market share

Reduce expenditure and milk brand

Strategies

Product Offer basic product

Offer product extensions

Diversify brand and models

Phase out weak items

Price Use cost plus Price to penetrate market

Price to match competitors

Cut Price

Distribution Selective Intensive More intensive Go selective

Advertising Product awareness among early adopters and dealers

Awareness in the mass market

Stress brand differences and benefits

Reduce to maintain hard core loyals

Sales Promotion

Heavy to entice trial.

Reduce to take advantage of heavy consumer demand

Increase to encourage brand switching

Reduce to minimal level